The Waitapu-2 well was drilled to a total measured depth of 2,085 metres, encountering approximately 6.2 metres of net pay in the Mt. Messenger Formation, a thick sequence of turbidite sandstones in New Zealand’s Taranaki Basin. The Waitapu-2 well is currently flowing at a rate of 325 barrels of oil per day and 800 thousand cubic feet of natural gas per day through a 24/64th inch choke. The well is producing sweet, high-quality 40 degrees API oil that is being trucked to the Shell-operated Omata Tank Farm, approximately 45 km north of the site, and sold at Brent pricing. To date the Waitapu-2 well has produced 1,880 barrels of oil. The well will be flowed for approximately two weeks and then shut-in for pressure build-up. Subject to assessment of ongoing production, a decision will be made to lay 1.3 kilometres of new pipeline to tie-in to the Waihapa Production Station through the existing Copper Moki pipeline.
“The fact that the Waitapu-2 well is flowing from natural reservoir pressure, as the Copper Moki wells did, further confirms NZEC’s geological model,” said Bruce McIntyre, Executive Director of NZEC. “Most Mt. Messenger wells in the region have required artificial lift almost immediately. We are continuing to refine our geological model based on drilling success to date and interpretation of the recently completed 3D seismic survey, and have many more prospects to drill that we feel are comparable to the Copper Moki and Waitapu discoveries.”
The Company’s first well drilled at the Waitapu site, the Waitapu-1 well, was drilled to a measured depth of 2,213 metres, then cased and completed across a gross interval of 30 metres in the Mt. Messenger Formation. While a significant sand interval was identified with oil and natural gas shows, the permeability and porosity was such that the well did not yield economic production. The well has been suspended pending further evaluation and/or sidetrack to an alternate target.
NZEC has reached target depth on the third well in its current eight-well program. The Arakamu-2 well, NZEC’s first well at the Arakamu site, has reached target depth at a measured depth of 2,380 metres. NZEC has commenced casing the well, with completion to follow. The well encountered 8.1 metres of net pay in two potentially productive zones in the Mt. Messenger Formation. The lower zone will be completed first with the second zone to follow. The Company will announce results from the Arakamu-2 well once testing has yielded enough information for the Company to estimate the well’s productive potential, with testing expected to commence in late November. Following completion of the Arakamu-2 well, NZEC will move the rig to spud Arakamu-1A, which is targeting the deeper Moki formation.
NZEC will drill four more wells after Arakamu-1A with the objective of completing its eight-well program and increasing production to 3,000 boe/d(1) by the end of Q1-2013.
NZEC will report its third quarter financial results on November 30, 2012, including a full update on exploration activities and the results of production optimization of the three Copper Moki wells, which are now producing under artificial lift.
On behalf of the Board of Directors
Bruce McIntyre, Executive Director
About New Zealand Energy Corp.
This news release contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation (collectively “forward-looking statements”). The use of any of the words “will”, “will be”, “pending”, “commenced”, “estimate”, “expected”, “targeting”, “objective”, “increasing” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements, including without limitation, the speculative nature of exploration, appraisal and development of oil and natural gas properties; uncertainties associated with estimating oil and natural gas resources; uncertainties in both daily and long-term production rates and resulting cash flow; volatility in market prices for oil and natural gas; changes in the cost of operations, including costs of extracting and delivering oil and natural gas to market, that affect potential profitability of oil and natural gas exploration; the need to obtain various approvals before exploring and producing oil and natural gas resources; the need to obtain government approval of work programs before exploring or developing properties; uncertainty in the timing of receipt of permits and the Company’s ability to extend the permits if required; exploration hazards and risks inherent in oil and natural gas exploration; operating hazards and risks inherent in oil and natural gas operations; market conditions that prevent the Company from raising the funds necessary for exploration and development on acceptable terms or at all; global financial market events that cause significant volatility in commodity prices; unexpected costs or liabilities for environmental matters; competition for, among other things, capital, acquisitions of resources, skilled personnel, and access to equipment and services required for exploration, development and production; changes in exchange rates, laws of New Zealand or laws of Canada affecting foreign trade, taxation and investment; failure to realize the anticipated benefits of acquisitions; and other factors as disclosed in documents released by NZEC as part of its continuous disclosure obligations. Information concerning reserves may also be deemed to be forward looking as estimates imply that the reserves described can be profitably produced in the future. NZEC believes the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct. Such forward-looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release and NZEC does not undertake to update any forward-looking statements that are contained in this news release, except in accordance with applicable securities laws.
(1) Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
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